July 11, 1999
Web posted at: 2:27 a.m. EDT (0627 GMT)

NEW YORK (CNN) -- Observers of high-tech stocks are wired about a new opportunity coming to Wall Street late next week -- a public offering by Chinese Internet company China.com.

China.com -- the first Chinese Internet portal to go public in the United States -- is seeking to raise as much as $67 million.

"By many conservative estimates, by the year 2003 China will have at least 33 million Internet users," said James Yao, executive director of AsiaTech Ventures. "So the opportunity for Internet growth in China is definitely tremendous."

China.com boasts a stellar list of investors and partners -- including America Online, which has the right to buy up to 25 percent of the company.

But a careful look at China.com's prospects could raise red flags for investors.

Despite its ownership of three potentially high-profile cyberspace addresses -- China.com, Hongkong.com and Taiwan.com -- China.com came in 17th in a study of China's most popular Web sites. And the company generated four times more revenue last year from Web consulting than from all three sites combined.

"They're definitely one of the early players, and therefore, as a result, they do benefit from this early mover advantage," Yao said. "However, there are many other players who have been moving a lot more aggressively than China.com."

Observers also question whether China.com's growth might be stunted by politics. The company concedes its domestic service is more restricted than what it offers beyond China's borders.

A competitor claims it was hard to log on to China.com from inside the country during the recent 10-year anniversary of the Tiananmen Square uprising.

"If you were to type 'China.com' into a browser in mainland China, it would just hang," said Kenneth Farrall, president of Virtualchina.com. "It would never get a response because the servers which block a number of sites, including CNN occasionally... were also blocking China.com during that period."

China.com denies it was ever censored, but in documents submitted to the Securities and Exchange Commission the company warned that censorship by the Chinese government could "have a material adverse effect on our business."

Correspondent Steve Young contributed to this report.

Virtual China
China.com (Simplified Chinese Version)

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